To offer to investors indicators that allow them to make the right investment while aligning their portfolios with the Paris agreements, Carbon4 is proposing its latest methodology: the Carbon Impact Analytics methodoloogical guide – CIA. Last month, Carbon4 also updated its Climate Risk Impact Screening methodological guide.
Carbon Impact Analytics (CIA) and Climate Risk Impact Screening (CRIS) methodological guide are both helping to assess the full climate impact and climate-related physical risks of portfolios through bottom-up measurement.
While CIA is measuring greenhouse gas (GHG) emissions directly and indirectly induced and saved, the Climate Risk Impact Screening (CRIS) was developed for financial service providers to assess the exposure of their portfolio to climate-related physical risks. This method, designed to flag potential risks and inform investment strategy, is a function of location-specific climate hazards and sector-specific vulnerability.
The CIA method also provides an assessment of the alignment of investor and lender portfolios with a climate-focused strategy.
Carbon Impact Analytics
For readers already familiar with the latest edition of the CIA methodological guide (2018), here are the main changes we’ve made to our methodology:
- Company overall rating: In addition to current and forward-looking performance, we also consider the past performance of the company to calculate its overall rating. It now ranges from 1 (best) to 15 (worst).
- Forward-looking qualitative grid: We’ve added a 5th criterion: governance of climate-related risks and opportunities. We also consider the two major activities of the company when conducting the forward-looking analysis.
- Temperature alignment: Alignment is now based on the overall rating ranging from 1 to 15, thus alignment formula was reviewed. As the CIA methodology covers more and more sectors, the dataset used to proxy the world economy grows bigger, thus refining the alignment methodology.
- Portfolio treatment: We now retreat multiple accounting between private (corporate) and public (sovereign) economic sector as well. See methodological guide for more precision
A short version of Carbon Impact Analytics methodological guide is available here.
The CRIS methodology to measure the physical risks of climate change for the corporate, sovereign and infrastructure investment portfolios is available here.
Source: Carbon4 – Carbon Impact Analytics